Breaking the Links: Natural Resource Booms and Intergenerational Mobility

84 Pages Posted: 11 Sep 2018

See all articles by Aline Butikofer

Aline Butikofer

Norwegian School of Economics (NHH) - Department of Economics

Antonio Dalla Zuanna

Norwegian School of Economics (NHH) - Department of Economics

Kjell G. Salvanes

Norwegian School of Economics (NHH) - Department of Economics; IZA Institute of Labor Economics

Date Written: September 6, 2018

Abstract

Do large economic shocks increase intergenerational earnings mobility through creating new economic opportunities? Alternatively, do they reduce mobility by reinforcing the links between generations? In this paper, we estimate how the Norwegian oil boom starting in the 1970s affected intergenerational mobility. We find that this resource shock increased intergenerational mobility for cohorts entering the labor market at the beginning of the oil boom in those labor markets most affected by the growing oil industry. In particular, we show that individuals born to poor families in oil-affected regions were more likely to move to the top of their cohort's earnings distribution. Importantly, we reveal that preexisting local differences in intergenerational mobility did not drive these findings. Instead, we show that changes in the returns to education offer the best explanation for geographic differences in intergenerational mobility following the oil boom. In addition, we find that intergenerational mobility was significantly higher in oil-affected labor markets across three generations and that the oil boom broke the earnings link between grandfathers and their grandsons.

Suggested Citation

Butikofer, Aline and Dalla Zuanna, Antonio and Salvanes, Kjell G., Breaking the Links: Natural Resource Booms and Intergenerational Mobility (September 6, 2018). NHH Dept. of Economics Discussion Paper No. 19/2018. Available at SSRN: https://ssrn.com/abstract=3246895 or http://dx.doi.org/10.2139/ssrn.3246895

Aline Butikofer (Contact Author)

Norwegian School of Economics (NHH) - Department of Economics ( email )

Helleveien 30
N-5035 Bergen
Norway

Antonio Dalla Zuanna

Norwegian School of Economics (NHH) - Department of Economics ( email )

Helleveien 30
N-5035 Bergen
Norway

Kjell G. Salvanes

Norwegian School of Economics (NHH) - Department of Economics ( email )

Helleveien 30
N-5035 Bergen
Norway
+47 5 595 9315 (Phone)
+47 5 595 9543 (Fax)

IZA Institute of Labor Economics

P.O. Box 7240
Bonn, D-53072
Germany

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